Store opening tipped for Apple

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Apple is expected tomorrow to announce the introduction of an
Australian iTunes music store to coincide with the start of its
annual MacWorld conference in San Francisco.

Australia would be the 16th country in which the computer and
consumer electronics maker has opened an outlet.

An Apple spokesman refused to comment on the hotly rumoured
launch ahead of any official announcement, but it is believed the
maker of the iPod digital music player has flown senior executives
from California to Sydney for tomorrow's announcement.

"We won't comment on what we are and are not launching because
it's Apple policy," the spokesman said. "I have been bombarded
(with requests to comment)."

Apple has iTunes music stores in Austria, Belgium, Germany,
Finland, France, Greece, Italy, Luxembourg, Netherlands, Portugal,
Spain, Britain, Ireland, Canada and the US but the domain name
itunes.com.au, which would be likely to point to an Australian
site, was still available for sale yesterday.

The iTunes Music Store allows customers to easily buy music
online, download it to their Windows or Mac computers for burning
to CD or download to their Apple iPod.

Reports in December suggested Apple had completed negotiations
with Australian record companies in the lead-up to a launch early
this year.

Apple's Australian download music store is likely to price songs
at 99¢ a track and $9.99 an album. This is about a third
cheaper than some other markets, such as the US, depending on
exchange rate fluctuations.

But veteran music industry commentator and analyst Phil Tripp
was dubious yesterday about whether Apple would launch its music
store this week, although he said it could launch in the next six
months. He said the next most obvious territory was Japan but that
launch was hampered by legal, cultural and currency issues.

"I can't imagine they would launch iTunes this Wednesday," he
said.

Mr Tripp criticised the established Australian download sites
for neglecting iPod users, who account for 70 per cent of digital
music player owners, contributing to "woeful" sales of online
music.

He said he doubted whether the top three legitimate download
services were handling the amount of business the sharemarket
believed they were.

Apple's eventual entry to the market would validate the business
model of the existing legitimate music download services, said Dean
Morrison, general manager of MusicPoint, an Australian music
download service and an associated company of Destra Music. Destra
has been selling online music since 2000.

"Any sizeable marketing push that Apple would bring will
generate bigger interest in this fledgling industry," Mr Morrison
said. "We would definitely welcome this type of push. The industry
will benefit and those doing it right will continue to benefit. The
sooner the better for us."

More than 200 million songs have been sold through Apple's
online stores since the launch of the US website on April 28, 2003.
Analysts at US equities trading firm Piper Jaffray expect last
month's record sales of 68 million songs to climb to more than 500
million this year as localised stores roll out across the globe.
Apple launched its Canadian store at the beginning of December and
its Irish store last week.

Apple's foray into consumer music electronics - a field once
dominated by Sony - with its iPod and iTunes software and download
music service, is credited with rescuscitating its fortunes as a
maker of mainstream personal computers to compete with Intel PCs
running Microsoft's Windows operating system.

Apple's share price has risen from $US21.70 to about $US70 in
the past 12 months. The shares rose 7.3 per cent on Friday on news
that Apple had sold 4.6 million iPods in the December quarter -
600,000 more than expected and 2.02 million more than the previous
period - and that first-quarter income could be as high as
US50¢ a share, US8¢ more than forecast.

Apple is also credited with reviving faltering global music
sales, with US analysts Nielsen Soundscan reporting that interest
in all modes of music - legal and illicit downloads and CD sales -
increased last year. It was the first increase in music CD sales in
four years. PC maker Hewlett-Packard and mobile phone maker
Motorola last week unveiled plans to release licensed versions of
the iPod.

This halo effect is expected to turn into new Apple products
tomorrow when it is rumoured Apple chief executive Steve Jobs will
unveil a $US499 Macintosh.

New York Times columnist John Markoff suggests Jobs, who
is also chief executive of Pixar - the Hollywood film-maker
responsible for blockbusters such as Toy Story, Finding
Nemo and The Incredibles - may be about to introduce a
cheap set-top box instead of a fully functioning PC competitor.

"For Apple, the nightmare consequence of a low-cost Mac scenario
is that it might do no more than cannibalise the company's
high-margin markets," Markoff wrote in a column last week, pointing
out that IBM had sold its massive loss-making PC business to
Chinese maker Lenovo late last year.

"Unless a cheap Macintosh is artfully crippled, many existing
Apple customers might decide to scale down instead of scaling
up.

"Having successfully connected the music world and the computer
worlds with the iPod, Jobs may have his sights on extending Apple
in other new directions - perhaps a high-priced set-top box -
rather than looking backward. He has worked his magic in Hollywood
before and would have the credibility to strike an alliance that
might permit Apple to deliver movies and video to some sort of
elegant digital home server."

Rumour sites suggest plans for a new iPod using flash memory,
perhaps with up to 2GB of memory able to store up to 500 songs or
50 albums. Apple has sought to stop rumours spreading on the
internet in advance of this week's Macworld announcements by
issuing civil orders in the US restraining their comments, without
specifying exactly which comments it wishes to restrain.